Free Markets, Free People

Economy

House votes to keep current tax rate

Dear media, the House vote last night – which sends the bill to President Obama for his signature – wasn’t an $801 billion tax cut bill, as the NYT headline blares. Certainly there are tax cuts in it, but not to the tune of $801 billion. Nor did "millionaires" get a “tax cut. “

All that happened is the House voted to maintain the current income tax rate for everyone. Nothing changes. No one gets "more" in terms of tax savings than they do right now and have gotten for most of a decade.  Well, except, perhaps, those who don’t pay any taxes into the system.  They may get more in the way of a “refundable credit”.

So quit spinning this as something it isn’t.  There is no permanent tax rate.  They aren’t “Bush era tax cuts”.  They’re the current tax rate. Period.

Keeping that rate doesn’t "cost" the government one red cent, because they never had the money to begin with. Pretending that somehow anticipated revenue from an increase in taxes is somehow a "cost" is a perversion of the English language as well as a misuse of an economic term.

Quit it.

Thank you.

~McQ

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Deciphering Paul Krugman’s latest message

Get your “Captain Krugman” decoder rings out and follow me through this Paul Krugman piece.

Today the line of attack on what he calls the “Obama-McConnell tax cut deal ” is to put forward the argument that the reason we’re in this mess to begin with is because of the debt carried by American families. Yes, that’s right – you did it, now shut up and take the medicine. Oh and the banks – yes, the banks because they “abandoned any notion of sound lending and because everyone assumed housing prices would never fall”.

Yeah, you guessed it  – not a thing about the Community Reinvestment Act, Congressional pressure on banks to lend to very marginal borrowers or Freddie Mac and Fannie Mae.  It was you, dear citizen … and the banks.  The government?  Sparkly clean by omission.

Anyway, because that debt is so high in relation to income and the families are in the middle of trying to deleverage that debt, they’re not spending much – or as much as is needed to kick start the economy, in Krugman’s opinion (they might if they had more but then that means even deeper tax cuts and Krugman ain’t going there).  And of course there’s that problem with high unemployment to factor in as well.

So, backing into this favorite theme of the past two years (Deficit?  Screw the deficit – spend, spend, spend), what or who should be spending to get the economy going?

Why yes Sparky, he means the government.

What the government should be doing in this situation is spending more while the private sector is spending less, supporting employment while those debts are paid down. And this government spending needs to be sustained: we’re not talking about a brief burst of aid; we’re talking about spending that lasts long enough for households to get their debts back under control. The original Obama stimulus wasn’t just too small; it was also much too short-lived, with much of the positive effect already gone.

It’s true that we’re making progress on deleveraging. Household debt is down to 118 percent of income, and a strong recovery would bring that number down further. But we’re still at least several years from the point at which households will be in good enough shape that the economy no longer needs government support.

But wouldn’t it be expensive to have the government support the economy for years to come? Yes, it would — which is why the stimulus should be done well, getting as much bang for the buck as possible.

Remember that last phrase because that’s the point of the post.  Now, with all of that background, Krugman says that this “Obama McConnell tax cut deal” will provide some stimulus but not the sustained stimulus Krugman says is needed from government.  And that first stimulus was too small – even though it was much larger than Krugman said was necessary at the time.  Nope  a massive stimulus is still needed no matter what we have to do to pump that money out there (even while the Fed is trying to sponge up the multi-trillion dollar spill of cash they tossed out there before):

The point is that while the deal will cost a lot — adding more to federal debt than the original Obama stimulus — it’s likely to get very little bang for the buck. Tax cuts for the wealthy will barely be spent at all; even middle-class tax cuts won’t add much to spending. And the business tax break will, I believe, do hardly anything to spur investment given the excess capacity businesses already have.

This is the point where cognitive dissonance smacks right into the Krugman “reasoning”.  A) he wants a new and much bigger stimulus – that’s no secret.  B) he claims this bit of stimulus (tax cut deal) will “cost” more (deficit) than it will deliver (bang for buck).  C) you can’t be trusted (shades of Clinton) to spend your own money the way the government would (perfectly, of course – properly, with no waste, and at exactly the right time and in the right place – having a coughing fit yet?).

For such a supposedly gifted economist it is like he missed Econ 101 in favor of Propaganda 101.  Either that or he really does believe, in the face of much evidence to the contrary, that a government spending money in a recession always returns “more bang for the buck” than does an individual (millions of individuals) in a market being allowed to keep and spend more of his money.  I am forever at a loss to explain that sort of thinking.

Pushing money out into an economy just to be getting it out there isn’t going to solve our economic problems.   In fact, if government has to be the big consumer of loan money to do so, guess what there’s less of for the private side of things?  Can you say “vicious circle”?And what does Krugman think a pure borrowing-based second stimulus plan is going to do to the debt?  Given the “bang for the buck” we received with the last stimulus, what makes Krugman think this one would be a better deal and superior to letting people keep more of their own money?

What I expect, instead, is that we’ll be having this same conversation all over again in 2012, with unemployment still high and the economy suffering as the good parts of the current deal go away.

The long and short of it is, this about isn’t economics, it’s about politics.  What Krugman wants is anything he can call economic improvement because he knows that Obama and the Democrats are in awful political shape.  His belief is if the Obama administration will quickly pass a huge stimulus and pump money into the economy, things will look somewhat better than they do now and he can make rosy predictions that should help carry the day for Obama’s re-election in 2012.  If it all collapses after that, who cares?  There will be plenty of time to make stuff up on the fly again and, of course variously blame the Republicans, the American people and, of course, the banks for any problems the economy may suffer.

~McQ

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Politics now takes center stage as tax deal moves to Congress

Let’s get a few things straight, shall we?   For the most part, this deal between Obama and the GOP on the Bush era tax rates isn’t a “tax cut”.  It is a maintenance or extension of the current tax rates.  There is nothing – absolutely nothing – permanent about any tax rate.  They’ve ranged all over the place in the history of the income tax and are, in fact, subject to the whims of Congress.  Within this package  there are some tax cuts (payroll taxes for a year) and tax giveaways (EIC, etc).  Other than that, it’s about keeping the current tax rates for everyone in a time of economic hardship.

Consequently it isn’t costing the government anything except a few rosy revenue projections if it had been able to increase taxes on the wealthy.  And consequently, at least that part,  adds nothing to the deficit.  Got that?  Nothing.  What adds to the deficit is spending based in borrowed money.

And that problem is found in the extension, again, of unemployment benefits.  So if there’s a spending negative, that’s it.  Some may argue that it’s necessary.  I personally wonder about that. 

Anyway, it is important, as the spin begins to come out on both sides about this deal that the basics be understood.

Yesterday a petulant president tried to defend the deal at a hastily called news conference.   Once into questioning, a bit of bitterness began to show through.  This particular quote struck me:

And I will be happy to see the Republicans test whether or not I’m itching for a fight on a whole range of issues.  I suspect they will find I am.  And I think the American people will be on my side on a whole bunch of these fights.  But right now I want to make sure that the American people aren’t hurt because we’re having a political fight, and I think that this agreement accomplishes that.

It reminded me of the kid picking himself up off the dirt of the playground after getting his rear end kicked and yelling “next time your butt belongs to me” at his antagonist.   Obama then goes on to call John Boehner a “bomb thrower” and compare the Republicans to hostage takers (to be fair, he was none to kind to the “professional left” and even took a shot at the New York Times).

But the bottom line remains, the GOP succeeded in getting the tax rates extended for all to include thousands of small businesses who would have otherwise been hit with higher taxes.  And what Obama is left saying is, “you know that line in the sand about doing away with tax cuts for millionaires, the one I drew 3 years ago and have promised to do away with ever since?  Yeah, well, wait till 2012, by gosh”.

Another interesting quote from the newser was this:

So the issue — here’s the choice.  It’s very stark.  We can’t get my preferred option through the Senate right now.  As a consequence, if we don’t get my option through the Senate right now, and we do nothing, then on January 1st of this — of 2011, the average family is going to see their taxes go up about $3,000. 

Is that a fact?  What have we heard for years concerning what the left continues to call the “Bush tax cuts”?  That they were primarily “tax cuts for the rich”.   Of course, they were much more than than and as is obvious, Democrats can’t allow them to expire or that nasty little truth would suddenly become widely known.

Finally, this struck me the wrong way:

This country was founded on compromise.

No.  It wasn’t.  It was a nation founded in a principle – that which said people have the right to be free from oppressive government and have the right to do what is necessary to accomplish that.  Any compromise had to do with the particulars of accomplishing the principle, not in the principle itself.  Obviously politics is the art of compromise.  What isn’t to be compromised is that founding principle and it is the ongoing compromise of it – or at least an attempt to do so – that has people figuratively up in arms.  Those Gadsden flags are waiving for a reason.

Anyway, each side is busily spinning a “win” for themselves on this particular deal.  All the while, political resistance is forming on both sides of the aisle in Congress.  Pelosi and Reid both seem less than enthusiastic about it and have signaled by their language that they may not have the votes to pass it.

Politically, the next few days should be interesting.

~McQ

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27% say government should manage economy

I’d like to say I’m “shocked – shocked I tell you”, but in all honesty I’m not.  Rasmussen reports that:

More than one-out-of-four Americans (27%) think the government should manage the U.S. economy, according to a new Rasmussen Reports national telephone survey. Nearly as many (24%) say it’s better for the government to stay out of economic decisions altogether.

First, just off the top, I can’t imagine how 27% can think the government would do a good job managing the economy except via abject ignorance about how the economy actually works.  Secondly, if they’re at all literate they must know that some of the worst economic failures as states have been those in which the government managed the economy.  And if they follow world events even in passing, they can find current examples of that failure in Cuba, Venezuela, Zimbabwe and North Korea to name a few.

So you’d have to figure they at least have some cognizance of what “government management of the economy” means to hold such a belief, right?  If so, then other than faith, what do they base their opinion upon?  Certainly not facts – or even success stories.

They remind me of people who begin smoking fully aware of all the awful things that tobacco use will eventually do to them and somehow naively believe they’ll be the exception to the rule.  One has to assume they have discovered a way that government management of the economy can work and are simply waiting for the right time to spring it on us all.

Or perhaps they’re just young, inexperienced and enamored with the theory.  I guess everyone goes through a period of kumbyah economics  where one believes that if everyone would just work hard and share and let a benevolent government manage it all, we’d live in an earthly paradise.  But I never thought as many as 27% wouldn’t outgrow that.

Even more disturbing is the fact that more think the government should manage the economy than think it should stay completely out of it.  I’ll bet that wasn’t at all the case in the 18th or 19th centuries.   In those days our ancestors were of the opinion the less government the better.  What a novel thought, huh?  And with that freedom they built a nation that is the envy of the world – at least for the time being.  Until that 27% have their way.

Seriously though – that number is a bit stunning.  27%.  More than a quarter of those polled actually expressed the opinion that we’d be better off if government managed the economy.  Does that bother anyone else?  And if so, how do you explain it?

27% of our countrymen think somehow government could do a better job managing the economy than markets. Markets which now manage, quite successfully mind you, billions of individual transactions a day in which the two (or more) voluntary participants part perfectly satisfied at the conclusion.  How would government do that better?  How would it better allocate goods, money, raw materials, etc., than does the market? What signals would it use to satisfy changing demand and ensure the right goods are produced at the right time and sent to the right place for the right price and at a profit which keeps the whole system moving in a positive direction?

I’m asking because I’d love one of the 27% to drop in an enlighten us poor rubes who just can’t seem to wrap our heads around the idea they’re backing in a positive way.  Then I’d ask them if they’d prefer Zimbabwe or North Korea to this poor benighted country and its ostensibly “free” markets.  Because obviously they can’t be happy here.

27%!?

Wow … a real head shaker.

~McQ

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November Unemployment

Once again this month, the employment report, weak as it is, hides even worse weakness in the labor market. Despite the banner headline of 39,000 new jobs, the number of Americans actually employed declined from 139.061 million to 138.888 million, a decline in employment of 173,000. And, of course, 39,000 new jobs isn’t really helpful anyway, when you consider that last month, the labor force increased by 122,000. We need to be creating 122k+ jobs a month just to keep even with population growth.

The real unemployment rate continues to rise, according to my personally devised measure of employment (Population numbers are in thousands):

NOVEMBER 2010

Civilian Non-Institutional Adult Population: 238,715
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 158,029
Actually employed: 138,888

UNEMPLOYMENT RATE: 13.8%

Compare and contrast that with April of this year:

APRIL 2010

Civilian Non-Institutional Adult Population: 237,329
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 157,112
Actually employed: 139,455

UNEMPLOYMENT RATE: 12.7%

Since April, the number of Americans actually employed has declined from 139.455 million to 138.888 million, a drop of 567,000 employed.

Unemployment rises to 9.8% – yeah, you read that right, rises …

Of course that’s the "official" number – as we’ve been pointing out for some time, the real number is well into double digits. But it again points out that markets are not at all happy with the business environment and consumers simply aren’t consuming at a level to push hiring even if it was settled.

In a significant setback to the recovery and market expectations, the United States economy added just 39,000 jobs in November, and the unemployment rate rose to 9.8 percent, the Department of Labor reported Friday. November’s numbers were far below the consensus forecast of close to 150,000 jobs added and an unemployment rate of 9.6 percent.

The increases tallied are mostly seasonal temporary work, meaning private companies aren’t creating many jobs at all (again, the economy has to generate around 125,000 new jobs a month just to stay even):

Private companies, which have been hiring since the beginning of the year, added 50,000 jobs in November. Most of those increases came from temporary help, where 40,000 jobs were added, and in health care, with an additional 19,000 jobs.

Retail jobs declined by 28,000 in November, while manufacturing, which had showed some strength earlier in the year, lost 13,000 jobs.

Government jobs dropped by 11,000 in the month.

Outlook? Bleak. Meanwhile the tax fight continues in the Congress. If you’re wondering why the business climate remains so unsettled, it is thinking like this which is typical of the majority party there:

Yeah, that’s right – this yahoo is claiming that small businessmen don’t ever make any decisions based on tax considerations. So they won’t mind a tax hike in the least.

How in the world does anyone take someone like that seriously? However, understanding that his thinking is most likely not uncommon there, it isn’t at all hard to imagine why Congress seems clueless as to how to stimulate the economy, is it?

~McQ

Are the chances for bi-partisanship real or imagined

Before we proceed today, let’s take note of a couple of things.

One, President Obama has made an executive decision to freeze federal payrolls for 2 years at a savings of $5 billion over those two years. Good for him. Of course the left is outraged, disingenuously claiming this will adversely effect jobs and the economy. Hardly.

While that money won’t be available to be spent by federal employees, it won’t be borrowed either. Or, it won’t be taken from the pockets of taxpayers who can now spend it directly on creating jobs or buying goods.

"Saving" the money doesn’t make it disappear, it simply means federal employees won’t be spending it (those who earned it will) or we don’t add $5 billion to the deficits of those 2 years.

Bigger political question? Is this actually an act of triangulation? Are we seeing this as the first indicator of an administration attempting to move to the center by getting out in front of the GOP on something?  Doing this before the big bi-partisan meet today between Obama and the GOP gives Obama the advantage of saying "OK, I’ve done something to reduce the deficit, what about you" (to which the GOP can say "earmarks"). Whether this is a political anomaly, just gimmickry or an actual move toward the center remain to be seen.

And two, on the GOP side, and in front of the meeting today, John Boehner and Mitch McConnell got their talking points out in an op/ed in the Washington Post. In sum they say the overwhelming message from the election says focus on jobs and the economy.

Perhaps the most important paragraph in the piece was this:

Despite what some Democrats in Congress have suggested, voters did not signal they wanted more cooperation on the Democrats’ big-government policies that most Americans oppose. On the contrary, they want both parties to work together on policies that will help create the conditions for private-sector job growth. They want us to stop the spending binge, cut the deficit and send a clear message on taxes and regulations so small businesses can start hiring again.

I think that’s mostly right. Cooperation for cooperation’s sake isn’t what is being demanded. Cooperation with a focus on jobs and the economy is. And it is also clear, as Boehner and McConnell state, that the American public wants some sort of workable plan to stop the huge deficit spending and to settle the business climate to the point that corporations and small businesses feel confident enough in it to begin hiring and expanding again. That means settling any number of outstanding issues like proposed tax increases.

Bottom line?  Don’t expect much cooperation from either side on things like energy, immigration, health care and the like except at the very margins.  However, there seems to be some signaling from Obama that he may be interested in more substantial cooperation when it comes to the jobs, economy and government spending/taxation.  If so, it would mean that Obama has set his cap for reelection in 2012 and believes that this is the route to accomplishing that (engage the GOP, give a little here and there, do high profile things like freeze government worker pay, and hope the economy and unemployment improve fairly significantly in the next 2 years so he can claim credit).

My guess is he now realizes that his agenda items are DOA.  But I also think he’s satisfied that what he has managed to get passed (ObamaCare and the like) is probably pretty safe from GOP meddling.  So he’s defining the area in which he’ll work and essentially demanding the GOP cooperate.  It will be difficult for the GOP to refuse that.

It is going to be interesting to watch the two sides maneuver over the next two years.   In ‘94 much the same sort of situation existed.  Bill Clinton was deemed irrelevant.  He came roaring back via smart politics and GOP mistakes to be reelected easily. 

We’ve already talked about the new narrative the left is trying to impose – the “GOP in charge” narrative, in which the GOP will be tagged with every failure of government even though Democrats still control the Senate and Executive branch.  But that won’t matter if the GOP House moves aggressively to do what Boehner and McConnell outline in their op/ed.  Make Democratic Senators defeat GOP House legislation.  And if it manages to get through the Senate, make Obama veto it.

Obama claimed that the difference between ‘94 and ‘10 midterms was “you’ve got me”.  That led to the worst “shellacking” in recent memory and much worse that ‘94.  Another difference between ‘94 and ‘10 is the new media.  If the GOP sticks with its guns, makes every attempt to carry out what it said is the people’s message and is thwarted by the Democrats, that story will actually be told. 

It will indeed be interesting to see how the big meeting goes today.  I don’t expect much in terms of substance, but if Boehner and McConnell are smart they’ll essentially relay their op/ed message to Obama and then stand back and see how he chooses to react.

For the moment, popular sentiment is on the side of the GOP.  They need to retain it by actually doing something.  If they don’t and the left succeeds in painting them in a negative way, 2012 could see the backlash from hell, 4 more years of Obama and possible Congressional gains by Democrats.

~McQ

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The progressive deficit plan, ala Krugman

In case you’re interested a group of progressive think tanks has produced an eighty-something page deficit reduction proposal.  Paul Krugman says he’ll have to study it, however:

It’s at least as responsible as any of the other plans being advanced, with a very different emphasis: more reliance on revenue, no attack on Social Security. Some of the revenue comes from indirect taxes — green taxes and fuel taxes — but the rest comes from measures that would raise taxes mainly on upper-income Americans.

I guess agreement or disagreement rests in your definition of the word “responsible”.  Let me just say I disagree.  A quick look at the plan (here, PDF) shows it’s pretty much the same old stuff.  Cap-and-trade, raise the income cap on Social Security, tax the crap out of the “rich”, an increased fuel tax and keep at least 50% of the electorate off the tax rolls.  Meantime cut the bejesus out of defense spending – one of the few actual constitutionally allowed federal government expenditures – and lay all those “savings” on health care and infrastructure.

Well here, let’s use their own 5 step plan:

1. Jobs first. Jobs and economic growth are essential to our capacity to reduce deficits, and there should be no across-the-board spending reductions until the economy fully recovers. In fact, efforts to spur job creation today will put us on a better economic path and create a solid revenue base. We believe there should be no consideration of overall spending reductions until unemployment has fallen to 6% and remained at or below that level for six months (Irons 2010a).

No “across-the-board spending reductions” until the economy fully recovers.  Really?  So the assumption here is in many areas of government, there is no “fat” that can be cut and thereby reduce spending?  That’s just nonsense and it puts into immediate question the credibility of this report.  Of course, unsurprisingly defense is not one of those areas which shouldn’t see such across the board spending cuts.

So immediately we have a “keep spending” recommendation until they deem the economy to be fully recovered (what’s that point, 5% unemployment?  3% GDP growth?) with economic predictions saying that we may not see joblessness reduced significantly by 2012.  So far, unimpressed.

2. Stabilize debt. Over the long term, national debt as a share of the economy should be stabilized and eventually brought onto a downward trajectory.

Well duh.  The key question here, given the “let’s keep spending” recommendation above is what constitutes the “long term”?  My guess is “never”.

3. Build on economy-boosting investments. We must build and maintain initiatives that directly support long-term job and economic growth. Failing to invest adequately in these efforts – or sacrificing them to short-term deficit reduction – would be a dereliction of sound public management.

Are you snickering yet?  Or are you already in the full out belly laugh mode?  If you are then you spotted the code words to “keep on spending” didn’t you?  So we have goal 1 – keep spending until the economy recovers and goal 3 – keep spending, er “investing” in stuff that will directly support “long-term job growth” even at the expense of deficit reduction.  But, wait, goal two – stabilize that debt folks.  How do you do that in light of 1 and 3?

4. Target revenue increases. Revenue increases should come primarily from those who have benefited most from the economic gains of the last few decades.

Tax the rich. Wow … that’s new. Don’t forget cap-and-trade and increased federal fuel “fees” as well.

5. No cost shifting. Debt reduction must be weighed against other economic priorities. Policies that simply shift costs from the federal government to individuals and families may improve the government’s balance sheet but would worsen the condition of many  Americans, leaving the overall economy no better off.

See unfunded mandates.  See ObamaCare.  See any number of “target revenue increases”.  See the nonsense?

Krugman goes on to say:

I’ll need to work through the proposal, but one thing it clearly does is to explode the myth that there is no alternative to the Bowles-Simpson-type regressive proposal.

What myth?  Did anyone honestly believe (or say) there wasn’t an alternative?  The fact that one exists doesn’t make it worth a damn though.  It simply exists.  Lots of  “alternatives” exist for all sorts of things.  The fact that they exist doesn’t make them credible or viable.  And my cursory reading of this paper presents nothing new and most of which has already been rejected by much of the American public.

And my favorite:

And it’s definitely worth noting that even with the revenue measures in the progressive plan, the US would have lower overall taxation than almost any other advanced country.

You mean like Greece and Ireland, Paul?  Japan? 

What a ridiculous argument for paying more taxes.   The problem in America, Mr. Krugman, isn’t that Americans are taxed to little – its because the politicians in our government spend too freakin’ much.  There’s not much in that plan that addresses that basic problem, is there?  And that’s why it’s as worthless as Krugman’s commentary.

~McQ

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Policy not profits is the reason for the slow recovery

I‘m always cynically amused by lead sentences like this from the supposedly unbiased media.

Unemployment is set to remain higher for longer than previously thought, according to new projections from the Federal Reserve that would mean more than 10 million Americans remain jobless through the 2012 elections – even as a separate report shows corporate profits reaching their highest levels ever.

Of course one has zippity do dah to do with the other. The reason corporate profits are reaching their highest levels ever is because corporations that have survived the recession have done so paring down to a "lean and mean" status by dropping headcount, closing unneeded facilities and cutting spending. Those workers that are still employed are what are necessary to carry the corporation forward in the financial situation and business climate we find ourselves in now. As the economy slowly picks up steam and additional headcount can be justified by additional business, it will be added. But, as we all know, employment is a lagging indicator – i.e. profits and such are going to go up before headcount goes up.

But there’s going to have to be a definite, traceable, unmistakable upward trend with a demonstrable increase in business before corporations add headcount again in the present business climate. And given what this administration and the 111th Congress have done – make war on American business – few are inclined to do that.

So? So it stands to reason that employment is down and will probably stay down until corporations and businesses see a much friendlier and stable business climate than they’re seeing now.

We haven’t been writing about the hostile climate here for our health or amusement. But as can be witnessed here, the subtle yet telling attempt to shift the blame is found in the first sentence. If only greedy corporations would simply start hiring instead of amassing profit, why everything would be peachy keen and our man in the White House wouldn’t be looking at the probability of high unemployment in 2012.

So prepare yourself to see these sorts of exercises in blame shifting at regular intervals over the next couple of years.

Even as conditions are likely to remain miserable for job seekers for years to come, an extraordinary bounce-back is underway in the nation’s corporate sector, with profits rebounding 28 percent over the past year to an all-time high in the third quarter.

Without this narrative, which the entire left and a good portion of the middle will swallow whole, the administration and Democrats haven’t an identified enemy with which to wage political war – and that, of course, is part of our problem now.

~McQ

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The Left’s new narrative?

Personally I think of Steve Benen as a bit of a lightweight when it comes to political analysis. But he can be counted on to faithfully repeat the left’s talking points, or absent that, come up with some off the wall theory (sometimes involving conspiracy) to try to explain and demonize the right. A recent wig out involves a vast conspiracy of right-wingers who want to see the economy stay sickly for political purposes. And it is all because, as he implies, the right-wingers "actively dislike the United States".

No. Really.

NONE DARE CALL IT SABOTAGE…. Consider a thought experiment. Imagine you actively disliked the United States, and wanted to deliberately undermine its economy. What kind of positions would you take to do the most damage?

You might start with rejecting the advice of economists and oppose any kind of stimulus investments. You’d also want to cut spending and take money out of the economy, while blocking funds to states and municipalities, forcing them to lay off more workers. You’d no doubt want to cut off stimulative unemployment benefits, and identify the single most effective jobs program of the last two years (the TANF Emergency Fund) so you could kill it.

You might then take steps to stop the Federal Reserve from trying to lower the unemployment rate. You’d also no doubt want to create massive economic uncertainty by vowing to gut the national health care system, promising to re-write the rules overseeing the financial industry, vowing re-write business regulations in general, considering a government shutdown, and even weighing the possibly of sending the United States into default.

You might want to cover your tracks a bit, and say you have an economic plan that would help — a tax policy that’s already been tried — but you’d do so knowing that such a plan has already proven not to work.

Does any of this sound familiar?

Does any of it sound familiar? In the context you’ve presented it, Mr. Benen – uh, no. It sounds contrived and fanciful – a wish a political hack would love to be true so he could use it to brand the opposition as unpatriotic and evil. Not that it being untrue will stop Mr. Benen from using such implications – this article is proof of that.

But you really have to suspend disbelief and pitch logic out the window to end up where Benen is with this particular piece. Cherry pick things that support your hare-brained thesis, give them a conspiratorial twist and bingo, you’re on your way to branding the opposition with something you’ve wanted to put on them for quite some time.

Benen then brings out some supporting fire:

Budget expert Stan Collender has predicted that Republicans perceive "economic hardship as the path to election glory." Paul Krugman noted in his column yesterday that Republicans "want the economy to stay weak as long as there’s a Democrat in the White House."

Got to love the hard hitting "Republicans "perceive" economic hardship as a path to election glory." Pure unsubstantiated speculation (unsupported by anything credible – certainly not Benen’s conspiracy theory nonsense).  Always fun to see a Democratic operative speaking about “Republican perceptions”, something I’m sure he’s absolutely tuned in on.

Certainly the state of the economy has worked to the detriment of the Democrats, but concluding a continuing poor economy is of value to the Republicans completely misses the message of the midterm election. And as Benen demonstrates, as does Krugman for that matter,  he missed the message too.  Not that anyone should be surprised.   The Democratic Congress missed it as well (see lame duck legislative priorities) as did the President.

Benen also turns to Matt Yglesias, a truly objective source, to give his batty theory some legs:

…I know that tangible improvements in the economy are key to Obama’s re-election chances. And Douglas Hibbs knows that it’s key. And senior administration officials know that its key. So is it so unreasonable to think that Mitch McConnell and John Boehner may also know that it’s key? That rank and file Republicans know that it’s key? McConnell has clarified that his key goal in the Senate is to cause Barack Obama to lose in 2012 which if McConnell understands the situation correctly means doing everything in his power to reduce economic growth. Boehner has distanced himself from this theory, but many members of his caucus may agree with McConnell.

Which is just to say that specifically the White House needs to be prepared not just for rough political tactics from the opposition (what else is new?) but for a true worst case scenario of deliberate economic sabotage.

Then it time for the cherry on top – liberal commenter Jonathan Chait:

Establishing motive is always very hard to prove. What’s more, the notion of deliberate sabotage presumes a conscious awareness that doesn’t square with human psychology as I understand it. People are extraordinarily deft at making their principles — not just their stated principles, but their actual principles — comport with their interests. The old Upton Sinclair quote — "It is difficult to make a man understand something when his salary depends upon him not understanding it" — has a lot of wisdom to it.

I don’t think many Republicans are actually trying to stop legislation that might help the economy recover because they know that a slow economy is their best route to regaining power. I think that when they’re in power, consequences like an economic slowdown or a collapsing industry seem very dire, and policies to prevent this are going to sound compelling. When you’re out of power, arguments against such policies are going to sound more compelling.

Really?  Or is it, as has been the case with most of the legislation the 111th Congress has passed or attempted to pass, just abysmally bad law? Occam’s razor, Mr. Chait.  Sometimes a cigar is just a cigar.  In the case of the legislation passed by the latest Congress, sometimes crap is just crap.

But back on point, does anyone see what’s going on here? It is "victimhood" time on the left. They will still control the Presidency and the Senate next year, but they’re already setting up the "Republicans are evil and are really in control of the government, so whatever happens isn’t our fault" meme.  Benen seems to realize that the current Congress and President have done an awful job with the economy. In fact, other than quickly throwing a few trillion dollars we don’t have at it (and which has seemingly had no measurable positive effect) they’ve ignored it for their ideological agenda items.  And, because of that, and the  obvious probability that the economy will not be in the shape necessary to give the President and Democrats a leg up in 2012, it is time to start switching the narrative and project the blame on the usual suspects.

And what better way to do that than to start yelling conspiracy theory (well sorta, kinda) and cobbling together disparate facts and fanciful rhetoric into dubious implications for a new narrative?

Premise: The Republicans are evil, only interested in regaining power (one assumes to finally destroy the nation) and will do whatever it takes to secure that power, to include sabotaging the economy.  Why?  Because they “actively dislike the United States”.

This from a group of people that actively worked for eight long years to sabotage (no conjecture here, the record stands on its own) a Republican Presidency and flat had tantrums if you ever questioned their patriotism or motivation.

But, as they say, that was then and this is now.  And now, of course, it’s “different”.

Hypocrites.

~McQ

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